To Pay or Not to Pay: The Distinction Between Volunteers and Public Employees

In today’s society, it is not uncommon to volunteer one’s services. You do not have to look far to find an employed man or woman freely offering their time to take part in an enterprise. However, there are some crucial issues raised by the philanthropic township employee who wishes to perform volunteer work for the township. Under current federal law, public employers can, under certain circumstances, be held responsible for minimum wage, overtime, and/or recordkeeping requirements for these volunteer employees. This E-Letter highlights the potential pitfalls of allowing employees to volunteer and how to properly avoid those pitfalls.

Introduction

In today’s society, it is not uncommon to volunteer one’s services. You do not have to look far to find an employed man or woman freely offering their time to take part in an enterprise. However, there are some crucial issues raised by the philanthropic township employee who wishes to perform volunteer work for the township. Under current federal law, public employers can, under certain circumstances, be held responsible for minimum wage, overtime, and/or recordkeeping requirements for these volunteer employees.

The Fair Labor Standards Act

The Fair Labor Standards Act of 1938 (“FLSA”), was enacted to maintain a “minimum standard of living necessary for health, efficiency, and general well-being of workers.”29 USC §202. To achieve this, the FLSA affords individuals certain protections such as requiring employers to (1) pay a minimum wage; (2) pay overtime for all hours worked over forty hours in a given week at time and one half the employee’s hourly regular rate of pay; and (3) make, keep, and preserve records of employee wages, hours, and other conditions of employment.The FLSA was extended in 1974 to encompass state and local employees.

For public entities, an issue arises when a public employee wishes to volunteer his or her services for the municipal employer. When the FLSA was amended in 1974, provisions were put in place to address this very issue. Currently, a state or local government is only obligated to afford FLSA protections (minimum wage, overtime compensation, etc.) to public employees. On the other hand, bona fide volunteers are generally not entitled to those. And in the middle, we have the public employee who wishes to volunteer time to the township.Thus, it is critical to understand the difference between a public employee and a bona fide volunteer.

The FLSA defines a public “employee” as an individual employed by the State, a political subdivision of a State, or an interstate agency, but excludes those individuals who are elected, a member of the elected official’s personal staff, appointed by the elective official appointments that serve at a policymaking level, immediate advisor to the elected official, or an individual who is not subject to the civil service laws of the State, political subdivision, or agency.On the other hand, a volunteer is generally defined as a person who performs a service for charitable or humanitarian reasons.

Volunteers are treated like interns who are hired by a public entity through a school program and who are involved in programs designed to provide professional experience in the furtherance of their education and academically oriented for their benefit are exempt from FLSA protections. An individual can only be classified at one time as either an employee or a volunteer—not both. An individual volunteering at a public entity will lose his or her “volunteer” status and thus be classified as a public employee if he or she:

Receives any compensation, or is paid more than a nominal expense, or reasonable benefits; or

Performs a service that is the same type of service in which they perform while working as an employee of the public entity.

In offering this definition in the federal regulations promulgated under the Act, Congress sought to ensure public employees were not coerced into “volunteering” their services by their employers.Thus, the Department of Labor (“DOL”) has expressly reiterated that an individual who “volunteers” for the same public entity by which he or she is employed will be classified as a public employee for the services rendered as a “volunteer” are the same services the individual offers as an employee.

Thus, if a township employee wishes to volunteer with or for the township, then he or she may not provide the “same types of services.” Doing so sacrifices that volunteer status and means the individual is entitled to minimum wage, overtime compensation, etc., unless otherwise exempt under the FLSA.

So how do you know if it is the…

“Same Employer?” This question is best left to a case-by-case basis; however, the DOL suggests two local agencies could be considered separate if they are treated as separate entities in documents issued by the Bureau of the Census, U.S. Department of Commerce.

“Same Type of Services.” Again, this is a factually dependent analysis. The DOL suggests using the definitions in the Dictionary of Occupational Titles as one factor to consider.

Examples of actual cases may clarify the issue:

A nurse employed by a state hospital cannot volunteer to perform nursing services at a State-operated health clinic which does not qualify as a separate public agency.

A township firefighter employee cannot volunteer as a firefighter for the same township.

A county detention officer may not volunteer to perform services as a special deputy sheriff.

A city police offer may volunteer as a part-time referee in a basketball league sponsored by the city.

An employee of a city’s park department may volunteer as a city or township firefighter.An office employee of a state-owned health institution may volunteer to spend time with the disabled in the same institution during off duty hours as an act of charity.

A public school security assistant may volunteer as the assistant coach to the school golf team.

A full-time high school custodian may volunteer as an assistant basketball coach at the same school.

Civil members of a police department (such as switchboard operators or record clerks) may volunteer as police reserve officers.

Firefighters may volunteer as police reserve officers.

There is one limited exception to the general rule that volunteers may not perform the same services for the same employer. Under § 203 of the FLSA, a public employee may volunteer to perform similar services for another public employer if the two agencies have a mutual aid agreement.This occurrence is typical of volunteer firefighters. This exception could even apply if the volunteer services rendered for one township are done so with the same geographical limits of the township where the individual is an employee.

Beware Nominal Benefits.Townships must be cautious in providing compensation or benefits in return for services rendered as a volunteer. Although the FLSA allows public employers to make de minimis payments for expenses, provide reasonable benefits, or a nominal fee, a bona fide volunteer could lose his or her classification as a volunteer and become subjected to FLSA protections if too much compensation is provided to the volunteer. Courts often employ the “economic reality test,” when determining whether an individual is actually acting as a volunteer as opposed to an employee.This test requires review of the economic realities of the relationship between the volunteer and the public agency. For example, a volunteer can be considered an employee under the test if the volunteer is dependent on the public agency for food and lodging, if the volunteer could be fined for poor work performance, or if the volunteer received benefits on a commission basis.

Conclusion and Recommendation

Volunteers are wonderful; of this, there can be no question. However, it is important for townships to understand and adhere to the FLSA to properly characterize an individual as a volunteer as opposed to an employee. In short, if one of your township’s employees wishes to volunteer for the township, look for these critical elements of volunteer status:

Be performed for charitable or humanitarian reasons;

Be met with no compensation, or de minimis payment for expenses, reasonable benefits, a nominal fee, or any combination thereof;

Not be the same type of service the individual is currently employed to perform; and

Take place outside of the public employee’s normal working hours.

If the above conditions are not met, the public employee will not be considered a bona fide volunteer under FLSA and the individual will likely be entitled to and afforded additional FLSA protections than your township may expect.

Fahey Schultz Burzych Rhodes PLC, Your Township Attorneys, is a Michigan law firm specializing in the representation of Michigan townships. Our lawyers have more than 150 years of experience in township law, and have represented more than 150 townships across the state of Michigan. This publication is intended for our clients and friends. This communication highlights specific areas of law, and is not legal advice. The reader should consult an attorney to determine how the information applies to any specific situation.

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